Bitcoin is smashing all-time records, recording a high of $8082 during the early hours of Monday, 20 November 2017. This rally after a 29% drop in price earlier this month. What is driving this price?
There has been much activity around Bitcoin during this year that could be tabled as drivers.
Firstly, Japan made Bitcoin a legal payment system on 1 April 2017. As shown in the graph below, the Japanese Yen dominates Bitcoin traded volume in the currency split followed by the USD and the South Korean Won. Japan’s institutions, merchants, investors, and consumers are all embracing Bitcoin. In the news recently, two Japanese public listed companies expanded their cryptocurrency operations into South Korea.
The planned Bitcoin hard fork of 1 August gave rise to a split in the blockchain, which created Bitcoin Cash in a MAHF (Miner Activated Hard Fork). This move resulted in months of discussion and disagreement between developers and “experts”. Some thought Bitcoin would be shaken and confidence would wain, however, this was not the case. Bitcoin has shown resilience as Bitcoin Cash grows in value reaching highs of $1250.
A couple of months later, another fork of the Bitcoin blockchain called Bitcoin Gold materialized – how many more coins can be derived from hard forks? What are the differentiating factors between Bitcoin, Bitcoin Cash and Bitcoin Gold – are they simply “me too’s”? If you qualify, read more about claiming your Bitcoin Gold.
The SegWit2X upgrade failed to happen – consensus was not reached to increase the block size on the Bitcoin blockchain from 1 MB to 2MB. Increase in block size was to ease transaction delays on the blockchain. Could SegWit2X still happen in the future? In the meantime, the price is being supported by traded volume as the market cap tops $130Billion – Coinmarketcap
Institutional Investment opportunities are increasing. Futures Options and ETF’s are the focus points for a collaboration between Gemini Bitcoin Exchange and the Chicago Board Options Exchange – poised for next month, December 2017. Another driver pushing the Bitcoin price higher – this is the start of opening up Bitcoin investment to retirement funds, banks, family offices, insurance companies and even governments. There are more than 120 Bitcoin hedge funds established according to a report by CNBC.
LedgerX initiated its first long-term bitcoin futures option called a Long-Term Equity Anticipation Security (LEAPS). The trade is set to expire on 28 December 2018. This means that each buyer will be able to buy Bitcoin at $10000 on that date, however, the buyer is not obliged to purchase the Bitcoin.
In preparation for Institutional investment, a recent blog post by CEO of Coinbase, Brian Armstrong, announced the launch of Coinbase Custody.
“Announcing Coinbase Custody: A Digital Currency Custodian For Institutions
Today, we’re announcing the launch of a new company to help institutional investors securely store digital assets: Coinbase Custody.
Coinbase is already storing more than $9B of digital currency on behalf of our customers, and we’re excited to bring a new product built specifically for institutional investors.
Over 100 hedge funds have been created in the past year exclusively to trade digital currency. An even greater number of traditional institutional investors are starting to look at trading digital assets (including family offices, sovereign wealth funds, traditional hedge funds, and more). By some estimates, there is $10B of institutional money waiting on the sidelines to invest in digital currency today.”
However, Bitcoin is not without its skeptics. Jamie Dimon made headlines this year calling Bitcoin a “FRAUD”. Since then, other bankers have voiced their concerns from “destabilization to fraud and money laundering“
Mike Novogratz stated that “Bitcoin will be the Biggest Bubble Ever” “Remember, bubbles happen around things that fundamentally change the way we live,” said Novogratz. “The railroad bubble. Railroads really fundamentally changed the way we lived. The internet bubble changed the way we live. When I look forward five, 10 years, the possibilities really get your animal spirits going.” Read more
Bitcoin.com reported “Malavika Nair of Troy University describes bitcoin’s price phenomenon as something other than a classic bubble. Bubbles, she said, do not go up, up, up, then down a bit, only to go up, up, up in price a full step higher than before. “Whatever it is,” she reiterated, referring to bitcoin’s valuation, “it is definitely not a bubble.” More than just speculation, every metric, from wallets to transactions, bitcoin grows over time. A bubble, bitcoin ain’t.”
What are your opinions and predictions?
Have you read the Bitcoin White Paper?
Read more about the 10 Drivers of the Bitcoin Price
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